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Electricity Grid Monitor Claims Interference

By

Rebecca Smith

Updated April 6, 2007 12:01 a.m. ET

The head monitor for the nonprofit corporation that oversees the nation's biggest wholesale-electricity market told federal officials his independence has been hampered by management interference, putting the integrity of a market that supplies power to millions of Americans under a spotlight.

Joseph Bowring, longtime monitor at PJM Interconnection LLC, said the interference "substantially" weakened his unit's ability to police the deregulated market. He said in a filing with the Federal Energy Regulatory Commission that he was ordered to make changes to PJM's most recent "state of the market" report, issued last month, and has experienced other occasions in which his unit's work was obstructed by PJM management. He said he believes the unit shouldn't have its budget and staffing controlled by PJM management, whose interests "may differ...from the Market Monitoring Unit's objective of providing objective, critical evaluations."

PJM spokesman Terry Williamson said he was unaware of occasions in which the monitor's work had been obstructed or changed. He added Mr. Bowring "is an employee and does report to management." Mr. Bowring couldn't be reached.

PJM is entrusted with operating the electric grid and ensuring a fair market for the wholesale-electricity transactions on which 51 million people in 13 states depend. The monitor watches for signs of market manipulation, which can sway power prices and affect needed supplies. PJM has administered about $71 billion in energy transactions since the regional markets opened in 1997.

PJM administers what is held up as the best-functioning market in the U.S., and evidence that its policing function is being undercut could further damage faith in deregulated markets. PJM reports to FERC and its market-monitoring function must pass muster at that body.

Mr. Bowring said his unit was put on notice last week that it likely will be disbanded and its work farmed out to consultants. The PJM spokesman said it has decided to examine the "risks and benefits" of creating an external market-monitoring unit but hadn't made a final decision.

Mr. Bowring's unit receives confidential information not available to outsiders pertaining to bidding behavior of market participants and the availability of generating units.

Observers said they believe FERC should investigate the matter. "The market monitor has his finger on the pulse of the market and it's the credibility of that function that gives credibility to the entire market," said Irwin Popowsky, head of the Pennsylvania Office of the Consumer Advocate. He and other state consumer advocates oppose farming out the function.

Electricity Grid Monitor Claims Interference

The head monitor for the nonprofit corporation that oversees the nation's biggest wholesale-electricity market told federal officials his independence has been hampered by management interference, putting the integrity of a market that supplies power to millions of Americans under a spotlight.